Analysis & Opinion

WELLINGTON (Reuters) - New Zealand on Monday announced plans for a government inquiry into how ingredients made by dairy giant Fonterra became contaminated with a botulism-causing bacteria, as the country tries to salvage its reputation as an exporter of safe agricultural products.

The inquiry, to be held alongside two internal Fonterra investigations and another by the country's agricultural regulator, will examine how the potentially contaminated products entered the international market and whether adequate regulatory practices were in place to deal with the issue.

"This will provide the answers needed to the questions that have been raised about this incident, both domestically and internationally," said Primary Industries Minister Nathan Guy, who is leading the inquiry along with Food Safety Minister Nikki Kaye.

"It is also an important step in reassuring our trading partners that we take these issues seriously," he said in a statement.

The contamination announced earlier this month has led to product recalls in countries from China to Saudi Arabia. Fonterra, the world's largest dairy exporter, has come under attack at home and abroad for dragging its feet in disclosing the discovery of the bacteria.

Fonterra Chief Executive Theo Spierings welcomed the inquiry, saying in the statement that the company would provide all necessary information.

The inquiry will be expected to provide an interim report in around three months.

New Zealand depends on the dairy industry for a quarter of its total exports. China is a major export market for New Zealand's dairy products.

Foreign Affairs Minister Murray McCully is visiting Beijing this week in to smooth relations with the country's biggest milk powder customer, and Prime Minister John Key has said he plans to visit China later this year to discuss the contamination issue after the inquiry results are complete.